Strong return to form in 80th year

Fulton Hogan expects the Christchurch rebuild to provide extra revenue in the current financial...
Fulton Hogan expects the Christchurch rebuild to provide extra revenue in the current financial year. Photo supplied.
Infrastructure. company Fulton Hogan had returned to a ''steady state'', on Tuesday reporting profits for the June 30 year well ahead of the previous corresponding period, managing director Nick Miller said yesterday.

Mr Miller was particularly pleased with the strong return to form in the privately owned company's 80th year of trading.

Fulton Hogan employs about 5300 people.

The Christchurch-based company reported earnings before interest, tax, depreciation and amortisation (ebitda) of $258.5 million for the June year, compared with $134.9 million in 2012 and $246 million in 2011.

The reported profit of $96.5 million for the period was well ahead of the $7.9 million in the previous period, but included some non-cash items relating to equity-accounted joint ventures.

The group also recorded its highest revenue of $3.22 billion in the period, up from $2.7 billion in the previous period.

The strong performance enabled Fulton Hogan to repay about $70 million of bank debt and complete another tranche of buying back shares from Shell. At balance date, the Shell shareholding stood at just above 10%, down from the original 37.4% when the buy-back started in December 2010.

Mr Miller said the greatly improved result followed decisive action by the company to address several issues which had dragged down the previous year's result.

''During the year, a lot of effort has gone into resolving operational and contractual challenges associated with several major Australian projects which had been hampered by some of the most severe weather recorded in decades.

''Our teams have made excellent progress in containing and retiring a number of these projects in a collaborative way.''

Among the projects to be resolved was the Pacific Highway, he said. Mr Miller described Fulton Hogan as being in a ''steady state'' although it still was allowing about $52.4 million or provision in the accounts for equity-accounted joint ventures.

Profit growth had come from across the business, demonstrating the group's strength across its portfolios.

That included the Australian construction and industries businesses, as well as New Zealand infrastructure and regional businesses, with strong results from the metropolitan markets of Auckland and Christchurch.

Overall, about 60% of the group's revenue came from Australia, something Mr Miller expected to increase.

One of Fulton Hogan's strengths was its virtual integration, meaning it could provide services across a wide range of activities such as surfacing, quarrying and asset management.

''This is a unique model in Australia and gives us an opportunity and a point of difference.''

In Australia, the engineering infrastructure industry was worth about $94 billion, of which $15 billion was pure roading. That gave Fulton Hogan plenty of scope for growth, he said.

Looking ahead, Mr Miller said the group started the year with 80% of its revenue locked in, something he was comfortable with. Forward orders totalled $3.4 billion.

The group was jointly bidding for the Transmission Gully public private partnership and pursuing outsourced road maintenance contracts in Australia.

''As a cornerstone member of Stronger Christchurch Infrastructure Rebuild Team, we continue to be in the front line rebuilding Christchurch, with the team now operating at full speed.''

Other projects being pursued were the stewardship maintenance contract in western Sydney, the Princes Highway upgrade and Berry Bypass in New South Wales, and southeast Queensland road maintenance contracts.

 

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